Fannie Mae now has a policy that pertains to multiple mortgages to the same borrower when that borrower is buying an investment property. Fannie Mae’s current policy limits the number of 1-4 unit financed properties in which the borrower may have an individual or joint ownership interest to four financed properties when the new mortgage being done is secured by an investment property or second home.
The limitation on the number of mortgages one currently has applies to the total number of properties financed, including financing done by seller held financing, Fannie Mae, Freddie Mac or a portfolio lender. This limitation has to do with “any and all” financing that an investor has used to finance a property.
In the past, Fannie Mae had modified this policy to allow investor and second home borrowers to own five to ten financed properties if they met certain eligibility and underwriting requirements. They no longer make any exceptions.
These sorts of rules are why most investors now get financing through non-traditional sources, and some even use “private lenders” who lend their own money and tend to charge much higher rates.
The moral of the story is that if you own four financed properties its the end of the line for you to get another mainstream Fannie Mae loan.
However, this limitation is NOT in place if you are buying or refinancing a new home that is legitimately your primary residence. When financing a primary residence, you can own any number of financed properties. I say “legitimately your primary residence” because investors will commonly ask me, “let’s just say this house I want to refinance is my primary residence”, even though we all know its rented out. You will NOT be able to pull this fast one any more as an investor, when your tax returns, bank statements and other documents all show your “real” primary residence address. For more on why its hard to get one over on an underwriter, click here for an interesting blog on that topic.